ABSTRACT

This study empirically investigates the effect of insurance industry contribution to economic growth in Nigeria. The Augmented Dickey Fuller Test, Ordinary lease Square Method, Descriptive Statistic, Co Integration and granger causality test was applied to annual Nigeria data spanning from 1981 – 2015. The result of the estimation suggests that there is a long-run relationship between the dependent and independent variables. However the study found that in the short-run insurance contribution to economic growth (proxied by total insurance investment) has a positive but insignificant effect on gross domestic product in Nigeria. Giving that the insurance industry is not as established as its banking counterpart the insignificant impact on the economy is not surprising. However, the positive relationship is encouraging suggesting that in the long run the impact will be significant. Hence, the study recommended that, The national insurance commission (NAICOM) which is the regulatory body for insurance business in Nigeria, in conjunction with the government should work to see that some of the premiums collected and other income generated by the industry are being invested to ensure diversification of investible fund of insurance industry to boost the economy.